Emerging Drug Developer: Hydra Biosciences

When Hydra Biosciences announced last week that it had raised $22 million in its Series D round, the developer earmarked much of that cash for its first clinical trial. The biotech company has now raised $69 million since it got started on a Series A in 2002.

So what's being doing with all that time and money?

About three years ago, says CEO Russell Herndon, Hydra dropped its initial focus on cardiac regeneration science and decided to concentrate entirely on its work related to transient receptor potential (TRP) ion channels. That's the same time he came on board as the new CEO.

TRP ion channels were discovered in humans about 11 years ago, explains Herndon, and offer an opportunity to very carefully target specific disease pathways. Ion channels are transmembrane proteins that facilitate the flow of ions (positively and negatively charged molecules) into and out of the cell, explains the company's Web site.

Hydra's strategy is to create new, first-in-class therapies that would offer a significant improvement over existing drugs. Compounds that are currently used to block sodium and calcium channels, explains Herndon, can trigger adverse events when random channels are blocked unintentionally.

With TRPs, says Herndon, "you're only hitting the channel of interest, so there's less chance of adverse events."

Hydra's lead program right now is in pain. According to Herndon, the TRP approach allows researchers to block pain without the numbness associated with a sodium or calcium channel blocker. And because it's a non-opioid, the company could be on to a new therapy that would come without the addictive issues that have plagued other therapeutics that rely on narcotics.

"It's a very exciting, new field of interest," notes Herndon, "and large pharmaceutical companies are very interested in these as well. There's a huge market opportunity."

Hydra's game plan this year is to get the pain program into the clinic later in 2009 and ink a collaboration that will likely leave early-stage development to the biotech and later-stage work to a partner with deep pockets.

"We look at pain as way to bring in partnering revenue," says the CEO. It's such a big disease target, a little biotech company like Hydra would never be able to market it. But it makes a lot of sense for a pharma company. And a lucrative partnering deal would provide an added injection of non-dilutive capital that would fund the developer's other programs in niche areas like asthma and renal disease--areas that the company could eventually go on to create a sales and marketing team to exploit.

"There are 28 separate channels in the super family," adds Herndon, "which have been found to be associated with different types of diseases."

Hydra now has some 40 workers, says the CEO, who anticipates "measured growth" in the year ahead.

Significantly, MedImmune Ventures came on as the lead investor in the Series D, joining a lineup of investors that already included Lilly Ventures and Biogen-Idec Ventures.

These kind of strategic investors "want to stay close to the company and keep their finger on the pulse," Herndon says. "It does provide them an opportunity to stay close."

And it gives the company the funds it needs to keep advancing their technology as the economy endures a brutal recession.

"With the economy the way it is, we're all thinking about runway, making it to the other side," says Herndon. After Hydra starts to sign up partners and advance new programs, the company can take a longer look at what the future holds, whether that's a buyout, an eventual IPO or the chance to keep growing into a more fully developed biotech company.

For right now, the focus is on taking one careful--and well funded--step at a time.